A scholar based in China writes:  Since the start of its post-Mao reforms in the late 1970s, the communist regime in China has repeatedly defied predictions of its impending demise. The key to its success lies in what one might call “authoritarian adaptation”—the use of policy reforms to substitute for fundamental institutional change. Under Deng Xiaoping, this meant reforming agriculture and unleashing entrepreneurship. Under Jiang Zemin, it meant officially enshrining a market economy, reforming state-owned enterprises, and joining the World Trade Organization. Under Hu Jintao and Wen Jiabao, it meant reforming social security. Many expect yet another round of sweeping reforms under Xi Jinping—but they may be disappointed.

The need for further reforms still exists, due to widespread corruption, rising inequality, slowing growth, and environmental problems. But the era of authoritarian adaptation is reaching its end, because there is not much potential for further evolution within China’s current authoritarian framework. A self-strengthening equilibrium of stagnation is being formed, which will be hard to break without some major economic, social, or international shock.

One reason for the loss of steam is that most easy reforms have already been launched. Revamping agriculture, encouraging entrepreneurship, promoting trade, tweaking social security—all these have created new benefits and beneficiaries while imposing few costs on established interests. What is left are the harder changes, such as removing state monop­olies in critical sectors of the economy, privatizing land, giving the National People’s Congress power over fiscal issues, and establishing an independent court system. Moving forward with these could begin to threaten the hold of the Chinese Communist Party on power, something that the regime is unwilling to tolerate.

Another reason for the loss of steam is the formation of an increasingly strong antireform bloc. Few want to reverse the reforms that have already taken place, since these have grown the pie dramatically. But many in the bureaucracy and the elite more generally would be happy with the perpetuation of the status quo, because partial reform is the best friend of crony capitalism.

Elizabeth Warren writes:  For too long, the opponents of financial reform have cast the debate as an argument between the pro-regulation camp and the pro-market camp. They generally put Democrats in the first camp and Republicans in the second.

But that so-called “choice” gets it all wrong.

Rules are not the enemy of markets. Without some basic rules and accountability, financial markets don’t work. People get ripped off, risk-taking skyrockets, and markets fall apart. Rolling back the rules or firing the cops can be profoundly anti-market.

Republicans claim – loudly and repeatedly – that they support competitive markets, but their approach to financial regulation is pure crony capitalism. It helps the rich and the powerful protect and expand their wealth and their power – and leaves everyone else behind.

This week, I gave a big policy speech which boils down to two principles:

First, financial institutions shouldn’t be allowed to cheat people. Markets work only if people can see and understand the products they are buying, only if people can reasonably compare one product to another, only if people can’t get fooled into taking on far more risk than they realize just so that some fly-by-night company can turn a quick profit and move on. That’s true for families buying mortgages and for pension plans buying complex financial instruments.

Second, financial institutions shouldn’t be allowed to get the taxpayers to pick up their risks. That’s true for using insured deposits for high-risk trading, and it’s true for letting Too-Big-to-Fail banks get a wink-and-a-nod guarantee of a government bailout.
We know what changes we need to make financial markets work better. Strengthen the rules to prevent cheating. Make the cops do their jobs. Cut the banks down to size.  Change the tax code to promote more long-term investment. Tackle shadow-banking done by non-bank firms and subsidiaries.

Changes like these can make a real difference. They can help protect hard-working families from cheats and liars. They can help rein in the lawless practices that are still too common on Wall Street. They can end Too Big to Fail.

The secret to better markets isn’t turning loose the biggest banks to do whatever they want. The secret is smarter, more structural regulation that forces everyone to play by the same rules and doesn’t let anyone put the entire economy at risk.

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Environmental activist group Sea Shepherd said it rescued 40 crew members from a sinking “poaching” ship it was pursuing for months for allegedly illegally fishing in the Southern Ocean, but described the ship’s sinking as suspicious.

Sea Shepherd said its ships Bob Barker and Sam Simon picked up the crew, which included the captain, from life rafts from the Nigerian-flagged boat Thunder.

They had been sailing in the waters of Sao Tome and Principe, an island nation off Africa’s western coast.

“It is an incredibly suspicious situation, to say the least,” Bob Barker’s captain Peter Hammarstedt said in a statement.

“When my chief engineer boarded the Thunder in the hours leading up to the sinking, he was able to confirm that there were clear signs that the vessel was intentionally scuttled.

“Usually when a vessel is sinking, the captain will close all hatches so as to maintain buoyancy. However, on the Thunder, the reverse was done — doors and hatches were tied open and the fishhold was opened.”

Sea Shepherd said the crew were given food and water and were transferred to Sam Simon.

Video recorded by the activist group showed the ship sinking just hours after it said Thunder issued a distress signal on Monday afternoon.

Hammarstedt said Thunder’s captain, who was not named, complained about being rescued and “started applauding and cheering” when the vessel sank.

“We’ve been chasing the Thunder for 110 days now, and I think they’re basically at the end of their fuel, and they would have had to make a port call,” Hammarstedt told the Sydney Morning Herald.

“I think the captain of the Thunder made the decision that he preferred the physical evidence on board… was better on the ocean bottom than going into port with him.”

Thunder, on a list of boats deemed to have engaged in illegal, unreported, or unregulated fishing activities by multi-national body the Conservation of Antarctic Marine Living Resources (CCAMLR), is suspected of illegal fishing for Patagonian toothfish and other rare species in the Antarctic.

Toothfish is sold as Chilean sea bass, which is popular in high-end restaurants. It sells primarily in the United States, Europe and Japan, although there is also a growing market in China.